Volkswagen Repair: Golf GTI Engine 2.0 115cv Mk3, oil seeps, head gasket

Question
Hi, I was driving when smoke came from beneath the bonnet(hood), the temp gauge read normal,but the oil light warning lamp came on. I pulled over immediately, opened the bonnet, it seemed like water was every where, and also there was oil here and there. I let the car cool down, then checked the water in the expansion tank, there was none, then I checked the oil via the dipstick, again this was empty. I called the rescu wagon out, now I live in Spain, and my spanish is not that good, but he was there shaking his head. The car had been running really well until then, and being in Spain you tend to check oil and water every couple of days. What do you think the problem is. Just to let you know also near one of the spark plugs, there looks like there as been a slight leak of oil here aswell, the water was also a brown sludgy colour. Do you think its just the head gasket or do you think I have cooked the engine, ands with oil from the spark plug, could this be one of the pushrods. Also to let you know that when the car was towed away, there was a deposit of oil and this sludgy brown stuff aswell. Do you think replace the head, head gasket, or the entire engine, its a real shame as before this it run perfectly and gave out no signs. Do you thinks its easy to repair, or am I hoping. Thank you

Answer
Hi Andrew;
There are 2 components that deal with oil and water all of the time, and they are right on top of each other, so to speak.  The oil cooler, and the oil filter.  The oil cooler is right on top of the oil filter, and in fact the oil filter spins onto an adapter that goes straight through the oil cooler.  Those 2 items would be my first guess.  Oil seeps from everyplace, a little bit.  If it's not the oil filter/ oil cooler thing then it's probably really expensive, and a new engine should be used, just to guarantee some reliability for a while.  Good luck, Andrew.  I hope you get your car back on the road, soon.